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Lonza shares rise 6.7% after CHI exit announcement

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Company to focus on CDMO business restructuring

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Plans M&A for tech and capacity opportunities

(Writes through, adding detail on CDMO business and M&A,

analyst comment and share price reaction)

By Isabel Demetz

Dec 12 (Reuters) - Swiss contract drugmaker Lonza

plans to simplify its structure and exit its capsules

and health ingredients (CHI) business after a decline in demand

for pharmaceutical supplies since the end of the COVID-19

pandemic.

"We need to come to the conclusion that Lonza is not the

best owner at this point in time," CFO Philippe Deecke told

reporters on Thursday, citing a mismatch between Lonza's core

skills and the CHI business.

Shares in the Basel-based company were up 6.7% at 1148 GMT,

on track for their best day since July, with RBC analysts

describing Lonza's update as "overall positive".

The planned CHI exit should remove a drag on Lonza's growth

and strengthen its balance sheet, even if it will cause non-cash

writedowns, the analysts said.

The company told investors it would determine its next steps

in relation to CHI in 2025 as it focuses on its contract

development and manufacturing organization (CDMO) business,

which makes drugs for pharmaceuticals companies.

Lonza is the world's largest contract manufacturer of

monoclonal antibodies, the technology behind a new class of

Alzheimer's drugs such as Eli Lilly's ( LLY ) donemab.

CDMO will be restructured into three business platforms -

Integrated Biologics, Advanced Synthesis and Specialized

Modalities - from the second quarter of 2025, from three

divisions and nine underlying businesses currently, the company

said.

Lonza will also focus more on mergers and acquisitions,

looking for deals offering "great opportunities for technologies

or capacities", finance chief Deecke told reporters.

CDMO sales growth is expected to approach 20% in constant

exchange rates next year, the company said, adding that organic

growth expectations at the CDMO business were in line with

medium-term guidance for 2028.

($1 = 0.8838 Swiss francs)